Key facts
- Carleton College will eliminate student loans from its financial aid packages, replacing them with grants and scholarships.
- The change at Carleton College will apply to both new and current students.
- Asbury Theological Seminary will phase out federal student loans and shift toward scholarships.
- Princeton University was the first US school to replace student loans with grants in 2001.
- Schools like Harvard and Yale have also implemented similar initiatives.
- The total US student debt burden affects over 40 million Americans, amounting to $1.7 trillion.
More colleges are moving away from offering student loans as part of their financial aid packages, opting instead for grants and scholarships that do not require repayment. Carleton College in Minnesota recently announced it would eliminate student loans for both new and current students, a move expected to benefit middle-income households and free graduates from debt that could impact their career choices. The initiative is funded by $80 million in donations, with the college seeking an additional $48 million.
Following suit, Asbury Theological Seminary in Kentucky announced it would phase out federal student loans in favor of scholarships, aiming to allow graduates to serve where they are called with less debt. Princeton University pioneered this approach in 2001, and other institutions like Harvard and Yale have since adopted similar strategies to address the significant student debt crisis in the US, which totals $1.7 trillion and affects over 40 million Americans.
These institutional changes come as many student-loan borrowers have reported difficulties in repayment due to factors like rising interest rates and employment challenges. The Trump administration had previously proposed reforms to student loan repayment plans.